RFID Patent Pool Officially Formed

Last week saw the official announcement of the RFID Consortium LLC, with seven inaugural members. The purpose of the organization is to provide "one-stop licensing" of intellectual property essential to compliance with EPCglobal Gen2 and related ISO/IEC standards.

December 3, 2007—Last week saw the official announcement of the RFID Consortium LLC, with seven inaugural members. The purpose of the organization is to provide "one-stop licensing" of intellectual property essential to compliance with EPCglobal Gen2 and related ISO/IEC standards. In addition to formally establishing the LLC, the organization has submitted a letter to the US Department of Justice requesting formal review and approval. It has also issued a call for other holders of essential RFID intellectual property to license it through the Consortium.

The effort behind the organization, sometimes referred to as a "patent pool," first began more than two years ago (see RFID Industry Patent Consortium Announced). "The fact that it's taken two years is a testament to the complexity of putting a pool together," Dave Poole, RFID Consortium spokesperson and former VP of patents and technology for Zebra, told RFID Update. "We've brought together holders of patents essential for UHF RFID products; we've agreed on the definitive terms of the licensing arrangement; and we've established an LLC to manage the arrangement," he said.

The patent pool concept, which has proved successful in other high tech areas such as DVD and MPEG-2, is that by consolidating the IP licensing process under one roof, a technology standard can achieve accelerated adoption. Each participating company confers to a third-party administrator -- the consortium -- the management of its IP licensing, thereby saving the considerable time and resources the company would otherwise have to invest developing licensing agreements with individual licensees. Similarly, licensees are spared having to painstakingly approach and negotiate a separate licensing agreement with each IP holder in turn; they can simply go to the consortium to subscribe to a standard licensing scheme available for all the relevant RFID patents of the participating licensors.

"This licensing arrangement will provide a convenient and cost-effective way for any interested company to obtain patent licenses required to implement the UHF RFID Standards," Lem Amen, vice president and general manager of 3M Track and Trace Solutions, was quoted in the announcement.

The list of participating companies is quite different than that announced back in 2005. Many of the original participants dropped out after determining that their patents are not "essential," which carries a strict legal definition.

"The mix of patents has also shifted," related Poole. "3M came in later and made a major contribution, for example."

The Consortium is not yet licensing patents to licensees, noted Poole. That can only occur when final approval is granted from the US Department of Justice, which Poole expects sometime in 2008. Upon approval, "the Consortium will be open for business."

In the meantime, the Consortium is encouraging participation from more prospective licensors that believe they hold essential IP and would like to benefit from licensing through the pool. Such companies should contact Via Licensing, the IP licensing services firm charged with managing the RFID patent pool and the Consortium's business functions (see RFID Patent Pool Selects Third-Party Administrator). Via will also handle the licensing, once federal approval for the Consortium is granted. The Consortium itself actually has no full-time employees.